Alberta cuts business tax, boosts infrastructure spending to reboot economy

By Dean Bennett

THE CANADIAN PRESS

EDMONTON _ Alberta is cutting business taxes, pumping billions into infrastructure and making a full-court press to lure jobs from Toronto, Montreal and elsewhere to rebound from the COVID-19 pandemic.

“We’re going to be placing a huge emphasis on finance and financial technology,” Kenney said Monday in Calgary.

“All of those banks and insurance companies down on Bay Street that are paying way more taxes. Their workers are paying way more taxes. They are paying way more for rent. They’re fighting Toronto traffic.

“We’re going to be telling them that they can save money for their shareholders, for their workers, for their operations by relocating financial and fin-tech jobs to places like downtown Calgary, downtown Edmonton.”

Kenney said they will also target companies in other locations such as Montreal, Houston and New York as his province works to dig out of a cratered provincial economy caused by the pandemic and by a global oil price war that sent profits into a tailspin.

Alberta has flattened the curve on COVID-19 and has reopened much of its economy, albeit with health safety conditions, and Kenney said now is the time to get the economy back on its feet.

This year’s budget deficit is expected to balloon from $7 billion to $20 billion.

Kenney announced an immediate $10 billion will be spent on a range of infrastructure projects, including roads, health-care facilities, and schools to create construction jobs, with spinoff benefits to other service providers.

Kenney cut the corporate income tax rate to 10 per cent from 12 per cent after taking office last year. That figure was to go down to eight per cent in the coming years, but Kenney announced it will be done this week. That makes it four percentage points lower than key competitors such as British Columbia.

Albertans already have the lowest tax regime in Canada and pay no sales tax.

There will also be an Innovation Employment grant to encourage high-tech companies and investment. The grant replaces tax incentives put in place by the previous NDP government, which Kenney scrapped on the grounds the incentives were too narrowly focused.

Details on this fund, and other sector-specific initiatives are expected in the coming days.

NDP Opposition Leader Rachel Notley said the $10 billion will help as a short term  “shock absorber” but called Kenney’s other ideas unimaginative, adding the corporate income tax cut didn’t bring back jobs before the pandemic, and won’t bring them back after.

“There’s very little new that is in here and it proves that this government is already out of ideas,” said Notley.

Ken Kobly, head of the Alberta Chambers of Commerce, said the announcement delivers critical aid.

“The measures announced today will help business operators get back on their feet so they can begin rebuilding our economy,” he said.

The plan is a marked departure from the laissez-faire economic platform Kenney championed and won on in the election. Kenney chastised then-premier Notley’s NDP at the time for heavy spending on infrastructure and on day-to-day operations, saying it would cripple future generations with unsustainable debt.

Since then, as the oil and gas economy has been slow to recover, Kenney assumed a more direct interventionist approach.

In March, his government agreed to provide $1.5-billion, plus a $6-billion loan guarantee, to Calgary-based TC Energy Corporation, enabling the completion of the KXL pipeline.

Finance Minister Travis Toews said Monday that “there’s good debt and bad debt.” Bad debt, he said, is borrowed money for operations while good debt invests in infrastructure that in turn lures businesses to the province.

“This is an incredible ditch that we have to get through, and so it warrants a significant investment,” said Toews.

 

More Canadians are worrying about the economy and over half are cutting discretionary spending

 TORONTO, June 29, 2020 /CNW/ – COVID-19’s impact on the economy is causing many Canadians to worry about the future: 79 per cent of respondents in CIBC’s Financial Priorities Poll say they are concerned about continued recessionary times next year, compared to 55 per cent who said they feared an economic downturn in a December 2019 survey.

Economic worries may be a factor in why many Canadians are adjusting their financial habits.

Many respondents (63 per cent) say they have significantly cut down on discretionary spending and more than half (55 per cent) agree they need to get a better handle on their finances this year.

“It’s understandable that Canadians are worried about the economy and are feeling uncertain about the impact on their ambitions, but this is a time when good financial advice conversations are most valuable, including assessing your overall situation, looking at opportunities to improve cash flow, and adjusting your financial plan if necessary,” said Laura Dottori-Attanasio, Group Head, Retail and Business Banking, CIBC. “It’s a positive sign that many Canadians are taking a responsible approach to the situation by making changes to their spending and working to limit unnecessary debt. Good cash flow management now can help you through the current situation, and over the longer term free up funds to divert towards savings or other goals.”

The survey also found that 46 per cent of Canadians say the economic impact of the pandemic has adversely affected their finances and a similar number (47 per cent) feel it will take more than a year to get their personal finances back on track. Canadians are prioritizing building an emergency fund in 2020, citing this as a top goal for the remainder of the year, followed by steering clear of adding on debt. Of the 22 per cent of respondents who’ve had to borrow more in the past 12 months, the number one reason was for day-to-day items (38 per cent) followed by a loss of income (28 per cent).

“The impact of the pandemic will be felt by Canadians for some time. While we have a long way to go to get back to a normal economy, taking charge of your finances now with a savings and debt management plan is an important step towards putting your personal finances back on track,” added Ms. Dottori-Attanasio.

The survey also found:

  • Top financial goals for the remainder of 2020 are: generally saving as much as possible (37 per cent), and avoiding taking on more debt (36 per cent)
  • Close to three-fourths of Canadians (74 per cent) say the uncertainty of the current environment makes it difficult to plan ahead, and over half (54 per cent) are generally worried about their financial future
  • The number of people who say they’ve taken on more debt is lower (22 per cent) than in December 2019 (28 per cent). Among those who have taken on more debt, 38 per cent say they did so to cover day-to-day expenses or due to loss of income (28 per cent) and job loss (18 per cent, +9 per cent from December 2019)
  • Regionally, the poll found differences in how Canadians are tightening their wallets. Residents in the Prairies say they are cutting discretionary spending the most, led by 76 per cent of those in Saskatchewan and Manitoba, and 69 per cent of Albertans, compared to the national average of 63 per cent
  • At 58 per cent, taking on more debt to pay for day-to-day items was the highest in British Columbia, 20 per cent higher than the national average of 38 per cent

Disclaimer

From June 8th to June 9th 2020 an online survey of 1,517 randomly selected Canadian adults who are Maru Voice Canada panelists was executed by Maru/Blue. For comparison purposes, a probability sample of this size has an estimated margin of error (which measures sampling variability) of +/- 2.5%, 19 times out of 20. The results have been weighted by education, age, gender and region (and in Quebec, language) to match the population, according to Census data. This is to ensure the sample is representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.

About CIBC

CIBC is a leading Canadian-based global financial institution with 10 million personal banking, business, public sector and institutional clients. Across Personal and Business Banking, Commercial Banking and Wealth Management, and Capital Markets businesses, CIBC offers a full range of advice, solutions and services through its leading digital banking network, and locations across Canada, in the United States and around the world. Ongoing news releases and more information about CIBC can be found at www.cibc.com/en/about-cibc/media-centre.html.

SOURCE CIBC

www.cibc.com

COVID 19 aid programs will have to end, others to be modified, Trudeau says

By Jordan Press

THE CANADIAN PRESS

OTTAWA _ The federal government is in talks with business and labour groups to figure out the future of billions in emergency aid, Prime Minister Justin Trudeau said one day after a warning that current spending was sustainable for only so long.

Emergency federal aid to date is approaching $152 billion in direct spending, which has pushed the deficit to an estimated $260 billion this fiscal year.

Parliament’s spending watchdog told a Senate committee Tuesday that current spending levels would limit the government’s ability to provide needed stimulus money during a recovery.

Budget officer Yves Giroux also said emergency programs had to sunset or else the country could be looking at tax levels not seen for generations.

Speaking outside his Ottawa residence Wednesday, Trudeau said some of the aid programs will have to be phased out.

Others, he said, would need to continue or be tweaked to aid in a recovery.

“We are still very much in the emergency phase, in the crisis phase of this, even as we’re seeing careful reopenings,” Trudeau said in response to a reporter’s question.

“We will, however, look very carefully at how we end certain programs, how we modify others in order to get our economy going again to where it was before (the pandemic) or even better.”

In his opening remarks, Trudeau seemingly previewed his thinking on the issue. He said fewer people would need help through the Canada Emergency Response Benefit as businesses reopen and workers are rehired, possibly with help from a federal wage subsidy.

The most recent CERB figures show more than $41 billion in benefits to 8.25 million people, pushing further beyond its $35-billion budget.

The first cohort of CERB recipients will max out their benefits the first week of July, raising questions about what to do with those who still don’t have a job, or those who can’t qualify for employment insurance.

“The focus of the next phase of the CERB has to be about those individuals and also create incentives to work for those individuals where some job may be available for them,” said Parisa Mahboubi, a senior policy analyst with the C.D. Howe Institute.

“The way that the CERB is designed may discourage them from accepting the job or looking for any job.”

A group of experts convened by the think tank recommended the government consider extending CERB eligibility beyond the July cutoff, but turn it into an income-tested benefit for those who go back to work.

Treasury Board President Jean-Yves Duclos told a midday press conference the CERB would likely lead to another support measure because something new will be needed to create a smoother recovery phase. What that might look like, he didn’t say.

Having greater transparency about support programs would help Canadians determine if money is being spent well, and maintain the credibility of aid programs while deterring fraud, said Toby Sanger, director of Canadians for Tax Fairness.

“You would just have better designed programs,” he said. “There could be better third-party judging of how well these programs have worked or haven’t worked.”

He cited a request from his group and others for public details on companies that receive federal support, such as through the $73-billion wage subsidy program.

Federal figures showed there have now been 181,883 unique applicants approved for the wage subsidy, which covers 75 per cent of wages up to a maximum of $847 per week for each eligible employee.

The total value of benefits paid stands at $7.9 billion.

Trudeau urged companies to sign up for the wage subsidy during his opening statement, echoing his request for landlords to use a commercial rent assistance program that opened for applications this week.

That program offers forgivable loans to cover half of monthly rents in April, May and June, as long as landlords drop rents by at least 75 per cent over the same period for eligible small businesses.

Giroux estimated the net federal cost of the program at $520 million this fiscal year. The budget officer’s report released Wednesday morning put caveats on that estimate, owing to the lack of clear precedent for this kind of program.

His report said that means the assumptions about industry eligibility and uptake by landlords “rely heavily on judgment.”

Ontario: Paying Employees For The Victoria Day Holiday During The Pandemic

Monday May 18, is Victoria Day (Journée nationale des patriotes, or National Patriot’s Day, in Quebec); a holiday which most employees are entitled to take off and receive public holiday pay. The COVID-19 pandemic has resulted in emergency leaves, temporary layoffs and reduced schedules. As a result, some may have lost track of upcoming long weekends and public holiday pay requirements. Below is a refresher on employee entitlement to public holiday pay in Ontario and how to calculate pay for employees who’s employment has been affected by COVID-19.

Public Holiday Pay

Generally, employees qualify for public holiday pay on Victoria Day if they have worked all of their last regularly scheduled workday before the public holiday or all of their first regularly scheduled workday after the public holiday, or have reasonable cause not to have not done so. This means that some employees whose work has been affected by COVID-19, will still be entitled to the public holiday pay for Victoria Day.

For example, an employee might not be scheduled to work the day right before or after the holiday. As long as the employee works all of their last regularly scheduled shift before the holiday and all of the first one after it, or has reasonable cause for not doing so, they will be entitled to public holiday pay.

Employees on Leave or Layoff

Employees may be entitled to public holiday pay while on leave, including a protected leave related to COVID-19, such a declared emergency leave. If the employee worked the last regularly scheduled day of work before the leave, and the first regularly scheduled day of work after the leave, or has reasonable cause for failing to do so, he or she will be entitled to the paid public holiday.

Similarly, an employee on layoff may be entitled to public holiday pay for a public holiday that occurred while they were laid off as long as he or she works their last regularly scheduled day before the lay off began and her first regularly scheduled day after being recalled, or has reasonable cause for failing to do so, they will be paid for the public holiday.

Calculation of Public Holiday Pay

Despite being entitled to public holiday pay, depending on when the employee took leave or was laid off, the calculation may still result in no payment. Holiday pay is calculated using the regular wages earned by the employee in the four work weeks before the week with the public holiday, plus all of the vacation pay payable during those four work weeks before week with the public holiday, divided by 20.

So, if the employee has spent more than four weeks without wages or vacation pay before the week of Victoria day, the amount of holiday pay collected will be $0. Employment Insurance benefits received during a leave or layoff do not count as wages, and thus will not be counted in the calculation of public holiday pay.

Employees with Reduced Hours

Employees who have reduced hours of work due to COVID- 19 are still eligible for public holiday pay. Specifically, if the employer has agreed to or imposed a reduced work schedule, and the employee works the full reduced shift before the holiday, they will qualify. However, as with leaves and layoffs, employees must have earned wages or vacation pay in the four work weeks before the public holiday, otherwise the amount to which they are entitled will be $0.

Victoria Day, this Year

For many, the May long weekend traditionally means getting the yard and garden ready for summer, and/or spending time with family and friends. However, for many, getting together with loved ones, and shopping for summer goods in the stores may be challenging or not possible. As the long weekend approaches, it is important to remember to socially distance and observe all guidance provided by government authorities. On that note, we wish you a safe and healthy long weekend.


About Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global law firm. We provide the world’s preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

For more information about Norton Rose Fulbright, see nortonrosefulbright.com/legal-notices.

Law around the world
nortonrosefulbright.com

Source: Mondaq

EI for COVID-19? What we know so far about the new emergency response benefit

The excerpted article was written BY  

The Trudeau government recently unveiled an all-new benefit for Canadians reeling from the economic impact of the coronavirus pandemic: the Canada Emergency Response Benefit.

CERB would deliver $2,000 every four weeks for up to four months to workers who lose their income as a result of COVID-19. The new program combines and replaces two previously announced benefits — the Emergency Care Benefit and the Emergency Support Benefit — and raises the government’s spending on direct financial aid to $52 billion.

While CERB was part of the Liberals’ Emergency Response Act, which has already received royal assent, details on the program are still scant. Ottawa expects around four million applications for the new benefit, a source within the Canada Revenue Agency, which will be administering the program, told Global News.

Here’s what we know so far, along with some of the major questions that arise from the information the government has released as of March 26. Global News will be updating this article as more details emerge.

Who can apply for CERB?

CERB will be available to “all Canadians who have ceased working due to COVID-19,” a press release from the Department of Finance says. That’s regardless of whether applicants would also qualify for Employment Insurance (EI) or not, the document adds.

CERB will apply to wage earners as well as contract workers and freelancers. Canadians will be able to access the benefit whether they have lost their income as a result of the economic repercussions of the health emergency or can’t earn an income because they are sick, quarantined, caring for someone with COVID-19 or have had to stop working in order to care for children who are either sick or home from school and daycare.

Canadians who are still formally employed but not receiving any income would also be able to receive CERB.

“This would help businesses keep their employees as they navigate these difficult times,” according to the Department of Finance.

The list of beneficiaries is long, but at least two major questions about eligibility have emerged so far.

First, it’s not clear whether the benefit would apply only to Canadians who have seen their income reduced to zero or whether workers who have seen a significant reduction in income but are still bringing in some money would also be able to apply.

“That’s the gap in their program, without a shadow of doubt,” said Lindsay Tedds, a professor of economics at the University of Calgary.

The second question is whether Canadians who would normally qualify for either EI would be able to choose whether to apply for it or CERB.

First, it’s not clear whether the benefit would apply only to Canadians who have seen their income reduced to zero or whether workers who have seen a significant reduction in income but are still bringing in some money would also be able to apply.

“That’s the gap in their program, without a shadow of doubt,” said Lindsay Tedds, a professor of economics at the University of Calgary.

The second question is whether Canadians who would normally qualify for either EI would be able to choose whether to apply for it or CERB.

Canada unexpectedly loses 1,800 jobs, widely missing forecasts

Canada’s economy lost 1,800 jobs in October, widely missing economists’ expectations of a 15,000 gain.

Kelsey Johnson | Reuters

OTTAWA — The Canadian job market stagnated unexpectedly in October, losing 1,800 net positions, while the unemployment rate remained at 5.5 per cent, Statistics Canada said on Friday, as employment declined in the manufacturing and construction sectors.

Analysts in a Reuters poll had forecast a gain of 15,900 jobs in October and an unemployment rate of 5.5 per cent. Wages for permanent employees rose by 4.4 per cent, Statscan said.

Canada lost 16,100 full-time positions last month, but gained 14,300 part-time jobs. The number of self-employed workers in October fell by 27,800.

The Canadian dollar weakened to a three-week low of $1.3232 to the U.S. dollar, or 75.57 cents U.S., after the jobs data was released.

“It definitely runs against the grain of very strong job gains we’ve seen through most of the past year,” said Doug Porter, chief economist at BMO Capital Markets, noting there was likely a “small, temporary boost” because of hiring tied to last month’s national election.

“We have to be cautious about reading too much into any one report, but it shows that the economy is not simply on a one-way trip north here,” Porter said.

Canada’s central bank, which has not moved since October 2018 even as its counterparts – including the U.S. Federal Reserve – have eased, held firm as expected last week, but left the door open to a possible future cut to help the economy weather the damaging effects of global trade conflicts. The Bank of Canada said it would monitor “the extent to which the global slowdown spreads beyond manufacturing and investment” going forward while watching domestic data.

“I don’t think one number will move the needle a whole lot at the Bank of Canada, but at the margin it’s a little bit more of a cautious signal,” Derek Holt, vice president of capital markets economics at Scotiabank, said of the jobs report.

Statscan said the services sector gained 39,000 jobs in October, with increases reported in public administration, as well as finance, real estate, insurance and rental leasing industries, while the goods-producing sectors saw a decline of 40,900 jobs on losses in manufacturing and construction.

The country’s manufacturing sector lost 23,100 jobs in October, mostly located in Ontario, while the construction sector lost 21,300 positions across five provinces, Statscan said.
In a separate release, Statistics Canada said the value of Canadian building permits dropped by a larger-than-expected 6.5 per cent in September to $8.3 billion because of declines in the residential sector.

Source: Financial Post

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